Stock-based compensation

Stock options

A summary of our stock option activity and related information is as follows:



	Shares		Weighted average exercise price per share		Weighted Average Remaining contractual Term (years)	Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2015	4,650,114		$	21.49	8.58	$	2,970
Granted	1,487,100		7.48
Exercised	(24,663	)	4.52
Forfeited / Canceled	(844,303	)	32.89
Outstanding at June 30, 2016	5,268,248		15.79		8.44	278
Exercisable at June 30, 2016	2,052,413		17.49		7.62	278
Vested and expected to vest at June 30, 2016	4,542,808		15.96		8.37	278

The total intrinsic value (the amount by which the fair market value exceeded the exercise price) of stock options exercised was $0.1 million for both the three and six months ended June 30, 2016. The total intrinsic value of stock options exercised was $1.6 million and $6.5 million for the three and six months ended June 30, 2015, respectively.

The fair value of each stock-based option award is estimated on the grant date using the Black-Scholes option pricing model using the following assumptions:



	Three months ended June 30,		Six months ended June 30,
	2016	2015	2016	2015
Risk-free interest rate	1.4% - 1.5%	1.6% - 2.3%	1.4% - 2.0%	1.6% - 2.3%
Dividend yield	—	—	—	—
Volatility	86% - 89%	73%	78% - 89%	73% - 75%
Expected term (years)	5.3 - 6.1	5.3 - 9.9	5.3 - 9.9	5.3 - 9.9

As of June 30, 2016, we had approximately $19.6 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options, which we expect to recognize over a weighted-average period of 2.7 years.

During the three and six months ended June 30, 2016, senior executives resigned from employment with us. In connection with the separations, all unvested stock options were forfeited. As a result of the forfeiture, we reversed $1.3 million and $2.1 million, net, of stock-based compensation expense during the three and six months ended June 30, 2016, respectively.

During the three and six months ended June 30, 2016, we granted options to purchase 446,450 and 1,487,100 shares of our common stock at weighted average grant date fair values of $5.28 and $5.27 per share, respectively, and with weighted average exercise prices of $7.32 and $7.48 per share, respectively. During the three and six months ended June 30, 2015, we granted options to purchase 1,006,100 and 1,425,600 shares of our common stock at weighted average grant date fair values of $23.73 and $24.00 per share, respectively, and with weighted average exercise prices of $36.19 and $37.93 per share, respectively.

Restricted stock units

We granted restricted stock units (“RSUs”) to Michelle Dipp, M.D., Ph.D., our then-current Chief Executive Officer in December 2014. The RSUs issued included a service-based award that vests evenly over eight quarters and a performance-based award that vests in two one-year tranches upon the achievement of certain performance conditions for the respective year, as determined by our board of directors. The grant date fair value of the service-based awards is based on the closing price of our common stock on the award date and the stock-based compensation expense for these service-based awards are recognized on a straight-line basis over the vesting period. The grant date fair value of the performance-based awards is based on the closing price of our common stock on the date that the performance criteria is established for each tranche and communicated to Dr. Dipp and the stock-based compensation for these performance-based awards is recognized over the requisite service period.

On March 29, 2015 our board of directors established the 2015 performance criteria for the first tranche of the performance-based award and communicated the performance criteria to Dr. Dipp. The grant date stock price of these performance-based RSUs was $43.47 per share. In December 2015 our board of directors determined that certain of the performance criteria had been met resulting in the partial vesting of the first tranche award. In January 2016, as part of Dr. Dipp's appointment as our Executive Chair all then outstanding RSUs previously issued to her were canceled, including the second tranche of the performance-based award and the remaining service based RSUs.

On January 5, 2016, we issued 250,000 RSUs to Dr. Harald Stock upon his appointment as Chief Executive Officer - Elect. The RSUs will vest over four years with 25% vesting on January 5, 2017 and the remaining RSUs vesting ratably over the next 12 quarters. The grant date fair value of the service-based award is based on the closing price of our common stock on the award date and the stock-based compensation expense for these service-based awards are recognized on a straight-line basis over the vesting period.

As of June 30, 2016, we had approximately $1.9 million of total unrecognized compensation cost related to non-vested service-based RSUs granted under the 2012 Plan. The expense is expected to be recognized over a weighted-average period of 3.5 years.